DOL Further Delays New Proposal for Fiduciary Rule

September 12, 2013, 10:23 PM

The Department of Labor announced that it is pushing back the timeframe for its release of the highly anticipated re-proposal for expanding fiduciary responsibilities for advisors who work with retirement plans. A new proposal had been expected to be released early this fall, but DOL representatives stated that nothing will come in October as the DOL continues to revise the proposal in an effort to get the new rule correct rather than released within the previously announced schedule.

The DOL withdrew its previous proposal in 2010 amid industry opposition in order to conduct more thorough cost-benefit analysis. The original proposal would have driven many independent firms and advisors out of the retirement market by bringing them under the definition of fiduciary and, thus, banning their receipt of commissions for providing advice. This would have left millions of investors without access to affordable retirement advice.

Another effect of the original proposal would have made valuation advisors to employee stock ownership plans fiduciaries to the plans to which they provide valuation services. This proposal was met with opposition from the ESOP valuation community, who fears it will increase their exposure to liability and increase cost.

The DOL representatives noted that the new proposal, when released, will undergo the process of soliciting and collecting comments from the public as well as holding at least one public hearing on the matter. As a practical matter, this means the new rules will not go into effect until late 2014, at the earliest. --Christopher L. McLean